© Reuters.
NEW YORK – The currency pair experienced a slight recovery today, halting its six-day downward trend amid a broader sell-off of the US dollar and increased buying interest in the Japanese yen. The pair had reached a multi-week low since November 14 but found some support in the mid-1.0700s. This rebound comes despite expectations that weaker equity markets may limit the US dollar’s losses and cap gains for the euro.
The market’s anticipation of a potential shift in the European Central Bank’s (ECB) monetary policy influenced the euro’s movement. Comments made on Tuesday by ECB Executive Board member Isabel Schnabel suggested that the central bank could consider pausing its rate hikes due to falling inflation rates. This dovish tone has led to market speculation about a substantial ECB rate cut, with predictions totaling 142 basis points in 2024.
Adding to the eurozone’s economic picture, German industrial production in October fell more than expected by 0.4%, signaling potential economic headwinds. Investors are now closely monitoring upcoming US employment data, including Jobless Claims and particularly the Nonfarm Payrolls (NFP) report expected on Friday, for further cues on currency movements.
In other currency news, the pair rose after the Bank of Canada decided to maintain interest rates at 5%. Meanwhile, remained subdued as strong demand for the US dollar persisted, with expectations that the Federal Reserve is unlikely to raise rates until at least July while UK interest rates are predicted to remain steady.
Currency pairs such as are consolidating ahead of the Eurozone GDP forecast, which is expected to be flat following weak retail sales data. The faces continued selling pressure due to China’s economic challenges and speculation about an upcoming rate cut by the Reserve Bank of Australia. However, anticipations of a dovish stance from the Fed might limit further losses for these currencies.
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